Bank of America: A Surprising Value

Options investors can take advantage of lingering fear to take a cheap, long-term position that should pay off as the economy improves.

Bank of America is one of the options market's favorite momentum trades. The stock has clawed its way back from oblivion, and traders have profitably wagered on the advance every time the stock nears a round number.

What has not often happened, however, is for investors to make strategic investments in anticipation the stock will advance much more than 50 cents at a time. Such is the skepticism toward a mega-bank that many investors...